Harley-Davidson's answer to tariffs: Global bike sales

Tariffs are hurting Harley-Davidson in the United States. But its international sales growth is promising.The ...

Posted: Jul 24, 2018 2:32 PM
Updated: Jul 24, 2018 2:32 PM

Tariffs are hurting Harley-Davidson in the United States. But its international sales growth is promising.

The motorcycle maker said Tuesday that it is cutting its profit forecast by 10% because of rising trade tensions. Tariffs from the United States and the European Union will cost the company an extra $45 million to $55 million this year.

"We're working with the administration and all governments we can get to get these tariffs removed" CEO Matt Levatich said in an earnings call.

Harley is in the process of moving some motorcycle production from the United States to Thailand. The move was planned before the tariffs began. But Harley said moving to Thailand became critical after the European Union implemented a 31% tax on motorcycles in response to Trump's tariffs on steel and aluminum imports from Europe.

President Trump blasted Harley's plan to move. He wrote on Twitter last month that he was surprised Harley "would be the first to wave the White Flag."

Related: Trump vs. Harley-Davidson: What's really going on?

There is some good news for Harley: The company posted stronger-than-expected second quarter earnings Tuesday.

The company's profit is up 6%, buoyed by a 0.7% increase in overseas sales compared to the same period in 2017. Profits topped Wall Street estimates for the sixth straight quarter.

Sales in the United States slid 6.4% because Americans are buying fewer big bikes. Sales also fell 3% to $1.71 billion.

By 2027, Harley plans to grow its international business to 50% and launch 100 new "high impact motorcycles and do so profitably and sustainably," the company said. More details of the strategy will be unveiled on July 30.

"We will take bold actions that leverage our vast capabilities and competitive firepower," Levatich said in a statement.

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